Sherman on Taxpayer Funded Stadiums

[anonFAFA]

I cannot fully agree with this...

Things are never so simple. Just because owners are billionaires doesn't mean they all own teams out of the goodness of their hearts or as a hobby. There needs to be a positive (or at least break-even) business case for it. Furthermore, if the can get tax payer dollars to make it more positive or to reach break-even, then they will. What's short-sighted is the lack of analysis on the economic benefit to the city in providing the venue.

The city has 2 options. 1) Fund the stadium to the point in which the city at least breaks-even on their investment. This return on investment comes from all direct and indirect taxes the city receives. 2) The investment doesn't have a positive return and you let the team go somewhere else.

As cynical as we all like to be sometimes, I can guarantee you, as a whole, that there is a positive benefit for a city to have a sports team and provide a venue for them to play. Otherwise, we wouldn't have around 90 stadiums/arenas across at least 3 major pro sports partially/entirely funded by the city. Can you find a study that shows one doesn't? It wouldn't surprise me, but I bet most do.

You can say, well, the owner should provide the stadium because he can and out of the goodness of his own heart, he should provide the City of Seattle with economic benefit at no cost. No one does this. Do you pay a contractor more money just because you can afford it? Of course not. You go to another contractor for a cheaper price at the same quality if you can. Just because you can pay more doesn't mean you will. Likewise, an owner will go to a city who will host them and provide some funds as a mutual benefit to both parties. This is business.

 

[mrt144]

I cannot fully agree with this...

Things are never so simple. Just because owners are billionaires doesn't mean they all own teams out of the goodness of their hearts or as a hobby. There needs to be a positive (or at least break-even) business case for it. Furthermore, if the can get tax payer dollars to make it more positive or to reach break-even, then they will. What's short-sighted is the lack of analysis on the economic benefit to the city in providing the venue.

The city has 2 options. 1) Fund the stadium to the point in which the city at least breaks-even on their investment. This return on investment comes from all direct and indirect taxes the city receives. 2) The investment doesn't have a positive return and you let the team go somewhere else.

As cynical as we all like to be sometimes, I can guarantee you, as a whole, that there is a positive benefit for a city to have a sports team and provide a venue for them to play. Otherwise, we wouldn't have around 90 stadiums/arenas across at least 3 major pro sports partially/entirely funded by the city. Can you find a study that shows one doesn't? It wouldn't surprise me, but I bet most do.

You can say, well, the owner should provide the stadium because he can and out of the goodness of his own heart, he should provide the City of Seattle with economic benefit at no cost. No one does this. Do you pay a contractor more money just because you can afford it? Of course not. You go to another contractor for a cheaper price at the same quality if you can. Just because you can pay more doesn't mean you will. Likewise, an owner will go to a city who will host them and provide some funds as a mutual benefit to both parties. This is business.

The benefit is almost never there in terms of return because the small amount of tax revenue almost never is balanced out by the hundreds of millions put up.

Also, billionaires aren't doing this out of community kindness, so they shouldn't get public goodwill for it. Shouldering the burden is public goodwill. That's the conclusion you should reach but somehow you turned towards, and I don't know how, "So we should let billionaires play us like a finely tuned violin and prey on our insecurities as a community"

 

[mikeak]

The benefit is almost never there in terms of return because the small amount of tax revenue almost never is balanced out by the hundreds of millions put up.

"

Based on what?

Are you accounting for increased tourism? Are you accounting car rental taxes? Are you accounting for Hotel taxes? Are you accounting for PR on TV showing the space needle over and over again (I could understand that this was worthless it if our city was St Louis or Cleveland )

Are you accounting for all the people that work those weekends and have a job and now rent / own a house that is more expensive than they would otherwise afford? Are you accounting for the increase in property taxes as a result?

There are a TON of small streams of revenue based on having a pro-team in your city -- I am confident that Seattle has received its money back.

 

[mrt144]

The benefit is almost never there in terms of return because the small amount of tax revenue almost never is balanced out by the hundreds of millions put up.

"

Based on what?

Are you accounting for increased tourism? Are you accounting car rental taxes? Are you accounting for Hotel taxes? Are you accounting for PR on TV showing the space needle over and over again (I could understand that this was worthless it if our city was St Louis or Cleveland )

Are you accounting for all the people that work those weekends and have a job and now rent / own a house that is more expensive than they would otherwise afford? Are you accounting for the increase in property taxes as a result?

There are a TON of small streams of revenue based on having a pro-team in your city -- I am confident that Seattle has received its money back.

Yes, I am accounting for that and I work in an industry and a company that uses economic impact calculators on what we do all the time, and yes, it's tourism.

 

[Popeyejones]

The benefit is almost never there in terms of return because the small amount of tax revenue almost never is balanced out by the hundreds of millions put up.

"

Based on what?

Are you accounting for increased tourism? Are you accounting car rental taxes? Are you accounting for Hotel taxes? Are you accounting for PR on TV showing the space needle over and over again (I could understand that this was worthless it if our city was St Louis or Cleveland )

Are you accounting for all the people that work those weekends and have a job and now rent / own a house that is more expensive than they would otherwise afford? Are you accounting for the increase in property taxes as a result?

There are a TON of small streams of revenue based on having a pro-team in your city -- I am confident that Seattle has received its money back.

This has been a hot topic of study for urban planners, urban geographers and economists for about 15 years now.

Rather than forecasting they model outcomes for the all the publicly funded stadium projects that already exist, taking into consideration all of the types of things you're talking about.

The general consensus is that putting public money towards sports stadiums is one of the worst, if not the worst, investment of public monies that a city can engage in when it comes to ROI.

If anything the more recent pushback against publicly funded stadiums is in reaction to nearly two decades of research on the issue.

They still happen however because owners are able to take advantage of what is referred to in economics as a principal-agent problem: https://en.wikipedia.org/wiki/Principal ... nt_problem

Mayors and city councilors are concerned with their reputations and keeping their jobs. They want big projects to put their names on, and fear they'll be out of office if a team actually leaves on them. Because of this, they us someone else's money (the public) in a way that will ultimately hurt the people whose money their using because to do so is in their own best interest.

This is starting to change however as it is no longer just cities, but also many of the people who populate them (see this thread as an example) who have gotten wise to the game that NFL owners are paying. Goodell and the NFL LOVES to crow about how much revenue the league generates (we're the most popular sport in America), but then claims to need public welfare in order to completely tear down and rebuild what are already structurally sound storefronts. It's a load of crap, and people increasingly have realized it.

 

[Seahawkfan80]

As long as he can afford it and some of the money does not come out of his pocket......

 

[Anonymous]

Let's not forget that Seahawks football is NOT the only sporting event occurring in that stadium. In fact, too many games and events are held there to mention. From high school championship games to rock concerts. Other stuff goes on there.

It is a public stadium, and thus is used by the public. As some have indicated above, once one delves into all those uses, the jobs created by them, and the jobs held associated with the maintaining and securing that very public stadium, one begins to realize NFL football is only a small part of why that stadium exists.

 

[mrt144]

Let's not forget that Seahawks football is NOT the only sporting event occurring in that stadium. In fact, too many games and events are held there to mention. From high school championship games to rock concerts. Other stuff goes on there.

It is a public stadium, and thus is used by the public. As some have indicated above, once one delves into all those uses, the jobs created by them, and the jobs held associated with the maintaining and securing that very public stadium, one begins to realize NFL football is only a small part of why that stadium exists.

But still doesn't negate that the ROI is laughably bad for football and baseball stadiums because the capital inputs are higher than just about any other stadium. Digging out of a 400 million dollar hole would take 20 million a year for 20 years to be break even on tax revenue alone - there are way cheaper options for building venues that give a higher ROI over the same amount of time, that also can reap the profits directly...like a convention center.

The other aspect to consider that hasnt been mentioned is that consumer dollars are not an unlimited tap that fills supply - People divert their discretionary spending on entertainment from one thing to sports without net tax revenue increase. Ponder what you sacrifice over the year in order to afford season tix or even two games in the nosebleeds. That same money could have been spent numerous places in the community and taxed appropriately by the respective community. There is new value created sure, but it sucks dollars away from restaurants and bars you would have patronized on non game days. With a publically financed stadium, the taxes on ticket sales are used to repay and service the bonds the public wrote. The food and beverage taxes are transitory to where they would have otherwise been spent.

 

[mikeak]

mrt144 -- valid points but there is one thing that isn't considered there that is very hard to put a dollar number.

I give you two job offers -- one in a city with a convention center............ one in a city with a stadium that gets bands, soccer and NFL. Which one would you rather move to?

If I say San Diego what do you think off? Zoo, Aquarium, Football, Beaches -- having things that people enjoy make them a destination city.

Having a convention center does not create excitement for the people in the city nor tourism outside of the direct tourism due to events

And after having lived in Detroit and seeing what the Casino's did to draining money from the local communities - Yes I agree 100% on discretionary spending drainage and you are spot on.

In regards to if the money could have been spent better for other investments that is to me not that relevant. The city should spend their money on its citizens and if the money is returned even if not at a great option but it does come back then it is not a "gift" to NFL owners. It is an investment in the city that is repaid over a long time.

When you pay the full bill / way more than can be recovered that is when it becomes a stupid and bad deal. I also don't like the new stadiums like Vikings and Falcons where almost every single seat (Falcons 100%) is a licensed seat. 20% or so I am fine with but if the city chips in then 100% psl's should not be allowed. Heck it should be less than 50%

 

[mrt144]

mrt144 -- valid points but there is one thing that isn't considered there that is very hard to put a dollar number.

I give you two job offers -- one in a city with a convention center............ one in a city with a stadium that gets bands, soccer and NFL. Which one would you rather move to?

If I say San Diego what do you think off? Zoo, Aquarium, Football, Beaches -- having things that people enjoy make them a destination city.

Having a convention center does not create excitement for the people in the city nor tourism outside of the direct tourism due to events

And after having lived in Detroit and seeing what the Casino's did to draining money from the local communities - Yes I agree 100% on discretionary spending drainage and you are spot on.

In regards to if the money could have been spent better for other investments that is to me not that relevant. The city should spend their money on its citizens and if the money is returned even if not at a great option but it does come back then it is not a "gift" to NFL owners. It is an investment in the city that is repaid over a long time.

When you pay the full bill / way more than can be recovered that is when it becomes a stupid and bad deal. I also don't like the new stadiums like Vikings and Falcons where almost every single seat (Falcons 100%) is a licensed seat. 20% or so I am fine with but if the city chips in then 100% psl's should not be allowed. Heck it should be less than 50%

True, there is no sizzle or civic excitement for a convention center and it pains me every single day despite the net benefit it can provide the city. Also, the other thing that is a strike against football and baseball stadiums about investment over the long haul is that there is an impetus by the private stakeholders to incur new financing before the old financing is paid off. Bonds for the Kingdome were still being paid off 14 years after demolition. That's nuts!

I don't know if I could answer the hypothetical job offer thing without sounding completely contrary... but I would base my move on quite a few factors ahead of entertainment accessibility and options - public transit since I don't drive, restaurant and grocery accessibility, weather and climate, access to nature/snow, internet options, etc etc. I admit, I'm kind of a different cat when it comes to how I like my litterbox.

 

[mikeak]

^ Agree on refinancing. Structure should be that re-financing is allowed for lower interest rate but only up to a number of years that was still remaining on the original loan. That way the pay-off would be within the time originally voted on by the citizens. I like that they can re-finance as interest rates go down etc but it shouldn't be redone on a new 30 years each time

Lots of people with family will look at the lifestyle. Entertainment is one of those things that carries a value

 

[Popeyejones]

Let's not forget that Seahawks football is NOT the only sporting event occurring in that stadium. In fact, too many games and events are held there to mention. From high school championship games to rock concerts. Other stuff goes on there.

It is a public stadium, and thus is used by the public. As some have indicated above, once one delves into all those uses, the jobs created by them, and the jobs held associated with the maintaining and securing that very public stadium, one begins to realize NFL football is only a small part of why that stadium exists.

All those things get factored into econometric analyses that show that public funds for stadiums are a horrible investment.

Also, AFAIK I know it is NOT a public stadium, just a public paid for one. What % of the gate receipts does the city get on ticket sales for a concert?

Mikeak-- regarding your hypothetical employee on the move, as a general rule people should not pay for things on which they cannot calculate a return beyond abstract hypotheticals. It's like a stranger saying you should give him 20 bucks for reasons he can't explain to you, and you giving him the money. But it's a step farther, as the twenty bucks is actually your friend's and you're instead giving your buddies hard earned money to a stranger on the street based on vague and abstract promises. Urban economists and the like have been tackling this issue for a long time ago and as much as they can throw at the wall to make the numbers work for cities it's just a horrible usage of public funds (save of course for people paid by teams to find the opposite, although that's a different story; I'm just talking independent, peer reviewed true academic inquiry).

 

[fenderbender123]

Because professional sports teams become so widely loved by the community, it makes it quite a bit easier to hold them hostage for taxpayer funding.

 

[mrt144]

Because professional sports teams become so widely loved by the community, it makes it quite a bit easier to hold them hostage for taxpayer funding.

How the saps in Cleveland call that love, I'll never know.

 

[jlwaters1]

I think Sherman is off-base on this point. The teams are corporations,(The Owner/s personal wealth is irrelevant IMO) in the case of the Seahawks It's= Football Northwest LLC - DBA SEATTLE SEAHAWKS. Sports teams are different from other big corporations, simply because they need a BILLION dollar asset that they use less than 1/4 of the calendar year- even with renting it out for concerts, rodeo's, ect.

The ROI just isn't there. For that reason I think that public funds are needed. There's a reason MOST "Arena's" are publicly owned by communities in which they reside. ( I work for one of the few that are privately owned-- There just isn't enough of a payoff on the investment)

There is definitely a benefit to the community. Having said this, i think there should be a limit on how much public funds are used. I'd say 25% (or maybe 1/3) of the cost should be the max, the rest should be privately funded.

 

[BlueTalon]

With all that said Seattle is one city that got something tangible for its citizens when they go to games. We are allowed to bring in outside food solely because Seattle put that in as a demand when they fronted the money

Didn't know that. I always wondered why they allowed it.

 

[BlueTalon]

This whole discussion is nice as a theoretical exercise, but the reality is there is a limited number of NFL franchises, and as long as there is a city that does not have a franchise that wants a franchise, it's a seller's market for the owners. St. Louis had this exact discussion -- the people saying "Let the owners pay for their own stadiums!" won the argument there, and St. Louis lost their NFL franchise. Hell, the same thing happened in Seattle and we lost the Sonics.

It's one thing to say the rich owners should pay for their own stadiums when talking in a bar or on an internet message board. It's a whole 'nother thing to take that fight public and actually try to win it. It's tantamount to telling the owners you'd be just as happy with the St. Louis Seahawks.

 

[kearly]

I remember when I visited then Seahawks Stadium prior to it's christening in 2002. I remember someone within ear shot of me saying "this is our temple" our something to that effect.

I happen to be a church-goer, and my church is very successful, having built many branch churches in the area over the past decade. All of this money was paid for by attendees through offerings over the years. And I wouldn't want to have it any other way, because even though *I* don't own the church, I like feeling that I contributed to it in some small way, that as a community we own it, even if legally we do not.

It would feel weird for me if our stadium were 100% paid for by one rich guy. It would feel ilke I was a guest in Paul Allen's house every time I went to a Seahawks game, rather than feeling like I was visiting our football temple. Yes, Paul Allen owns Century Link field, the deed is in his name, but there is a level of ownership for the fans as well, even if it is unofficial.

Secondly, I think that if a rule was passed forcing owners to pay for all Stadiums and upgrades, you would see WAY fewer new stadiums and way fewer upgrades and a lot more dilapidated situations like (random example) Key Arena. And if an owner is going to be spending $1-2 billion to build a new stadium, why not build it in a new city? If you are going to spend that kind of money, you could spend it anywhere...

Overall I think having the public invested in stadiums is good for three reasons. It creates a feeling of communal ownership, it helps keep our stadiums state of the art and it helps steer owners steer clear of temptations in other markets.